Daily Blog by Piagi

Piagi reports as Norman Lamont slams the Euro

 

Piagi reports today as the Former Chancellor of the Exchequer Nigel Lawson called for the U.K. to leave the European Union, saying it is no longer in the country’s economic interest to remain in the bloc.

Lawson said he would vote for Britain’s exit in a referendum that may be held in 2017, arguing that the costs of remaining part of the union outweigh the “transitional” costs of leaving. Deputy Prime Minister Nick Clegg said the former chancellor was rehearsing arguments that are part of an “anguished debate” in the Conservative Party.

“The heart of the matter is that the very nature of the European Union and of this country’s relationship with it had fundamentally changed after the coming into being of the European monetary union and the creation of the euro bzone, of which, quite rightly, we are not part,” Lawson, who was chancellor from 1983 to 1989 under Margaret Thatcher, wrote in the Times newspaper in London today. “That is why, while I voted ‘in’ in 1975, I shall be voting ‘out’ in 2017.”

Lawson, a lawmaker in the upper chamber of Parliament, is the most senior Conservative to say Britain should leave the EU and his intervention comes days after the party lost seats in local elections to the U.K. Independence Party, which campaigns for Britain to pull out of the 27-nation bloc.

Lawson compared Prime Minister David Cameron’s promise of a plebiscite by late 2017 on whether to remain in the EU on new terms or leave with Harold Wilson’s 1975 referendum on membership of the then European Economic Community. He said any changes secured by Cameron with the EU would be “inconsequential.” Cameron says he will argue for Britain to stay inside the EU.

Exit Costs

Clegg, whose Liberal Democrat party is the junior partner in the governing coalition, told BBC Radio 4 that British exit from the EU would cost 3 million jobs and lead to a loss of influence in Washington, Beijing and Tokyo.

Peter Kellner, president of polling company YouGov Plc (YOU), said an April 21-22 survey showed 43 percent of voters want to leave the EU compared with 35 percent who say the U.K. should stay in. When asked whether the U.K. should stay in under new terms, a majority favors remaining part of the bloc.

Cameron’s pledge to hold a referendum on EU membership if the Tories are re-elected in the 2015 general election has earned rebukes from across Europe and within his own coalition for creating greater uncertainty at a time of economic turmoil.

Piagi reports as the Pound is Little Changed Versus Dollar

 

Piagi reports as the pound was little changed versus the dollar before a report that economists said will show U.K. services industries expanded for a fourth month in April, adding to signs the economic recovery is picking up pace.

Sterling was 0.2 percent from its strongest level in more than three months against the euro. A gauge of activity was at 52.4 last month, the same as in March, Markit Economics and the Chartered Institute of Purchasing and Supply will say today, according to the median prediction of 27 analysts in a Bloomberg News survey. Readings above 50 indicate expansion. Reports this week showed manufacturing and construction shrank in April by less than economists predicted.

The pound traded at $1.5533 as of 7:35 a.m. London time, after climbing to $1.5606 on May 1, the highest since Feb. 13. It has appreciated 0.4 percent since April 26. Sterling was at 84.14 pence per euro. It reached 83.98 pence on April 26, the strongest level since Jan. 24.

Sterling has appreciated 2.6 percent in the past month, the best performer among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro rose 1.5 percent, while the dollar dropped 0.4 percent.

Piagi reports as Sterling hits 11 week High

 

Piagi reports today as the Great British Pound rose, approaching an 11-week high versus the dollar, as an industry report showed U.K. construction improved more than economists predicted in April, fueling optimism that the recovery will pick up pace.

Sterling gained for a second day against the euro before the European Central Bank announces its interest-rate decision. The U.K. currency has strengthened 3.1 percent in the past month against the dollar after slipping 6.5 percent in the first quarter of 2013. The Bank of England meets next week after data yesterday showed an index of manufacturing shrank in April less than economists predicted, weakening the case for more stimulus. U.K. government bonds fell.

“At the moment, the U.K. economy is surprising more downbeat expectations” and allowing the pound to rally, said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “It’s a corrective rebound phase after a sharp decline in the first quarter.”

The pound rose 0.1 percent to $1.5577 as of 11:15 a.m. London time after climbing to $1.5606 yesterday, the highest since Feb. 13. It advanced for a seventh day against the U.S. currency, the longest run of gains since April 2012. Sterling appreciated 0.3 percent to 84.52 pence per euro after reaching 83.98 pence on April 26, the strongest level since Jan. 24.

An index of building-industry output increased to 49.4 from 47.2 in March, Markit and the Chartered Institute of Purchasing and Supply said today. While that was below the 50 level that indicates contraction, it was more than the median forecast of 48 in a Bloomberg News survey of nine analysts.

The construction gauge hasn’t been at 50 or above since October.

Currency Indexes

The pound has gained 2.6 percent in the past month, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro rose 2.1 percent, while the dollar dropped 0.9 percent.

The ECB will lower its main refinancing rate by 25 basis points to a record-low 0.5 percent today, according to the median forecast of 70 economists surveyed by Bloomberg. The Bank of England’s Monetary Policy Committee next meets on May 8-9.

Governor Mervyn King has wanted to expand the U.K. central bank’s 375 billion-pound asset-purchase target for three consecutive months but has been outvoted by a majority on the nine-member policy committee, minutes of their meetings show.

“The data that we’ve been seeing hasn’t been as bad as expected,” said Jane Foley, senior foreign-exchange strategist at Rabobank International in London. Still “the data has just not been good enough for the market to see good reasons for additional momentum.”

The 10-year gilt yield rose two basis points, or 0.02 percentage point, to 1.67 percent. The 1.75 percent bond maturing in September 2022 fell 0.18, or 1.80 pounds per 1,000- pound face amount, to 100.665.

Piagi reports as the U.K. Pound Gains After GDP

 

 

Britain’s economy grew a more-than-estimated 0.3 percent in the first quarter after contracting 0.3 percent in the previous quarter, the Office for National Statistics said. Japan’s Prime Minister Shinzo Abe said before a central bank review of policy tomorrow that monetary easing has produced good results. ExxonMobil Corp., Amazon.com Inc. and 3M Co. are among more than 50 companies reporting today.

The yen strengthened for the first time in three days against the dollar while gold climbed to a two-week high. The British pound jumped after a report showed the economy avoided a triple-dip recession.

Japan’s currency advanced 0.3 percent to 99.22 per dollar at 9:35 a.m. in London after government data showed Japanese investors were net sellers of overseas debt for a sixth week through April 19. Gold jumped 0.9 percent after central banks in Russia and Kazakhstan increased purchases of the metal. Silver climbed 0.1 percent. The pound climbed 1 percent against the dollar. The Stoxx Europe 600 Index fell 0.1 percent and Standard & Poor’s 500 Index futures increased less than 0.1 percent.

The Stoxx 600 erased an earlier advance of as much as 0.2 percent. Royal KPN NV (KPN) sank 5 percent as the Dutch phone company set the terms of a 3 billion-euro ($3.9 billion) share sale at a discount of 62 percent from the stock’s market value. British American Tobacco Plc climbed 2.2 percent, the biggest gain in seven weeks, as Europe’s largest cigarette maker reported revenue growth that beat estimates.

Jobless Claims

A report at 8:30 a.m. in Washington may show U.S. jobless- benefit claims were 350,000 for the week to April 20, versus 352,000 in the preceding period, according to a Bloomberg survey of economists.

Earnings beat estimates at 73 percent of the 195 companies in the S&P 500 that posted results so far this season, according to data compiled by Bloomberg.

The MSCI Emerging Markets Index (MXEF) rose 0.8 percent, gaining for a second day to a two-week high. South Korea’s Kospi climbed 0.8 percent and the won appreciated 0.5 percent versus the dollar after the economy grew by a faster-than-estimated 0.9 percent last quarter.

Piagi can help with International Property Purchases

Buying International property: make the most of your currency transactions

For individual’s investing in overseas property, recent fluctuations in the exchange rate have highlighted the importance of using a foreign exchange specialist to plan your money transfers in advance.

At Piagi we provide you with an overview of how our services can help you with all forms of money transfers for people who own or are thinking of buying property overseas:  


Buying a Foreign property

When purchasing a holiday home or investment property overseas, timing is crucial as you are buying a large amount of foreign currency so trading at the right time will mean your money will go a lot further. At Piagi our Currency experts can tailor our services to suit your needs to make sure you trade when exchange rates are in your favor.

A ‘forward contract’ is just one of the services Piagi can provide to clients making international money transfers. You book to buy or sell your currency in the future, at a rate you fix today. Forward contracts can help protect against adverse currency movements and can be used to lock into favorable exchange rates.


Selling a property overseas

The same tailored service applies if you choose to sell your foreign property and repatriate the funds back to your home country. One example is with the Euro currently much stronger than sterling, now would be a good time to transfer funds back to the UK.

One method available through Piagi is to take advantage of the current strong euro rate is by issuing a market order. You can choose a ‘limit order’ which is where you set a higher target exchange rate at which you will buy/sell your currency. Your order will be fulfilled automatically if this rate is reached in the markets. Effectively, this guarantees a maximum rate at which your currency will be exchanged.


Mortgage payments

Once you have made all your initial overseas payments to purchase your property, you may still need to make monthly overseas mortgage payments. Piagi can also help you with these transfers.

We allow you to lock into favorable exchange rates for up to two years, giving you peace of mind that the amount of foreign currency arriving in your overseas account will stay the same each time. Piagi agree to trade your sterling on an agreed date each month automatically then send the purchased Currency to your designated Foreign bank account, so every month you can relax in the knowledge that your transfers are taken care of.


Living expenses/ad-hoc payments

Perhaps you need funds to help cover living expenses whilst overseas, or to pay for maintenance costs on your property. At Paigi your foreign exchange specialists. At Piagi you can send money overseas at highly competitive exchange rates – all at the touch of a button. Payments are sent via SWIFT as ‘priority’ payments and transfer fees are more often lower than your current bankers.

There are various choices for sending money overseas, so it’s important to speak to a specialist like Piagi to understand all the options available to you.

Piagi GBP RURO market update

 

GBP EUR Market Update

Piagi reports today as the Pound to Euro exchange rate shrunk by around -0.4 cents last week as weak UK jobs figures and a credit rating downgrade from Fitch made Sterling less attractive to investors.

GBP/EUR commenced the week at around 1.1735, and stuck to that level fairly rigidly last Monday as a sparse economic docket did little to influence the pair. The troika said that Greece's economic outlook remains "largely unchanged from the previous review", and the ECB said that it would not support failing banks: the day's headlines resembled the re-cap at the start of an American television drama, rather than a fresh new episode.

On Tuesday the UK Consumer Price Index printed inline with the market consensus at 2.8%. The inflation figure is substantially higher than the Bank of England's target rate of 2.0%, and therefore boosted the Pound due to optimism that it would deter the BoE from another round of quantitative easing – QE is inherently inflationary and would most likely drive the CPI figure even higher above the BoE's target. However, Sterling sunk to a -0.6 cent defeat during the afternoon as the IMF downwardly revised UK growth from 1.0% to 0.7% in 2013 and from 1.8% to 1.5% in 2014.

The Pound was subject to another battering on Wednesday morning as the UK Unemployment Rate inched higher to 7.9%. The rise in joblessness was largely attributed to an increase in the number of people looking for work – a good thing in reality, a bad thing in terms of statistics. The knockout punch, however, was dealt by the Average Weekly Earnings report, which sunk to an all-time low of just 0.8%. Combined with the high CPI inflation print, the disastrous wage growth figures painted a gloomy picture of UK household spending capacity, and Sterling was subsequently hammered by traders, falling -0.5 cents to a weekly low of 1.1581.

The Pound was ready for action in the afternoon though, and rallied by around 1.2 cents as ECB Board Member and Bundesbank President Jens Weidmann said that it could take up to a decade for the Eurozone to emerge out of the debt crisis. His assertion that an interest rate cut could be needed damaged demand for the Euro and allowed GBP/EUR to bounce back by around 1.2 cents to 1.1710.

The Sterling / Euro exchange rate remained fairly steady on Thursday as UK Retail Sales fell by an unexpected -0.7% in March, but Italian Presidential elections failed to provide a new leader. The soft British Retail figures went by unpunished as markets looked on with hazy eyes as Italian politicians voted for dead fascists, live pornstars, and football managers, rather than serious candidates for the Presidency.

The Pound shrunk by around half a cent on Friday to 1.1650 as traders reacted to Fitch's decision to slash the UK's AAA credit rating to AA+. The decision was put down to the weak climate for economic growth and the rising government debt pile.

So far this week the Pound has clawed back around 0.25 cents due to profit-taking stances, and Sterling could push ahead further if the UK avoids sinking into a symbolically significant triple-dip recession. On Thursday the UK first quarter growth figure will be announced; a score of 0.1% is expected, and this would be enough to settle investors' nerves and could lead to a strong Sterling relief rally.

Important Eurozone PMI data is due to be released tomorrow; the dataset is unlikely to show a significant change in fortunes for the currency bloc, with German Service Sector Output the only major index predicted to come in above the 50.0 level that separates growth from contraction. Comments from ECB Board Member Jens Weidmann suggest that as long as no further significant shocks are highlighted by the PMI data, then the European Central Bank will refrain from cutting interest rates for the time being.

There is scope for GBP/EUR to challenge technical resistance levels around 1.1840-50 if the UK GDP print shows positive growth, however a weaker-than-anticipated figure would signal disaster for the British Pound and could see Sterling track lower towards yearly lows in the region of 1.1346.

Piagi reports as U.K. Retail Sales Decline More Than Forecast

 

Piagi reports as U.K. retail sales fell more than forecast in March as cold weather during the month depressed purchases of clothing and household goods.

Sales including fuel fell 0.7 percent from February, when they increased 2.1 percent, the Office for National Statistics said today in London. The median forecast of 23 economists in a News survey was for a 0.6 percent decline. From a year earlier, sales declined 0.5 percent.

Weak wage growth and accelerating inflation are squeezing household budgets, hitting sales on Britain’s high streets and at shopping malls. Bank of England policy makers are split on the need to expand stimulus, with a majority expressing concern that the prolonged period of inflation above their 2 percent target may undermine price stability.

“Major headwinds remain,” Martin Beck, an economist at Capital Economics Ltd. in London, said before the data were released. “Confidence remains weak, while borrowing growth is sluggish. So we doubt that we are about to see a strong consumer rebound. Meanwhile, although households have made progress in deleveraging, we think that this process has further to go.”

Excluding fuel, retail sales fell 0.8 percent in March from February and rose 0.4 percent from a year earlier. Last month was the second coldest March on record and stores said it damped sales, according to the statistics office.

‘Challenging’

The pound was little changed against the dollar after the data were published. It traded at $1.5231 as of 9:32 a.m. London time.

Sales at food stores rose 0.9 percent in March, according to today’s report. Clothing and footwear declined 3.1 percent, while household goods plunged 6.2 percent, led by a drop in demand for electrical appliances and hardware materials.

Debenhams Plc (DEB), the U.K.’s second-largest clothing retailer, said today that consumer sentiment remains “weak” and market conditions are “challenging.”

The report also showed that non-store retailing rose 6 percent in March from February and was up 26 percent on the year. That’s the biggest annual increase since records began in 1988. The ONS said internet sales accounted for 10.4 percent of all retail sales in March.

In the first quarter, retail sales rose 0.4 percent. The ONS is due to publish gross domestic product data for the quarter on April 25, which will show whether Britain has slipped into a triple-dip recession.

IMF Outlook

The International Monetary Fund cut its U.K. economic forecasts this week and said the BOE should consider increasing stimulus to boost the recovery. The Washington-based fund also said Chancellor of the Exchequer George Osborne should consider easing the pace of budget cuts.

Minutes of the Monetary Policy Committee’s April meeting published yesterday showed Governor Mervyn King was defeated for a third month in a push for more stimulus. Six of the nine- member panel voted to keep the target for quantitative easing at 375 billion pounds ($572 billion). The majority raised concerns about inflation expectations.

Today’s ONS report showed that the retail sales deflator, a measure of changes in shop prices, fell to 0.6 percent in March from 0.7 percent in February. Excluding auto fuel, the deflator was 0.9 percent. On food sales, the deflator was at 3 percent.

Piagi reports as GBP Slides to One-Month Low Against Euro

Piagi reports today as the pound fell to a one-month low against the euro after a government report showed the U.K. unemployment rate climbed and wage increases slowed, adding to signs the economy is weakening.

Sterling dropped versus all except one of its 16 major counterparts as minutes of the Bank of England’s April meeting released today showed Governor Mervyn King pushed for additional stimulus for a third month before being outvoted. The International Monetary Fund cut its forecast for the U.K. economy yesterday and suggested the government and the central bank should increase stimulus. Gilts advanced.

“The outlook for the U.K. economy and the pound are actually quite bad,” said Arne Rasmussen, head of currency research at Danske Bank A/S in Copenhagen. “The jobs data today is disappointing. That’s why investors should not underestimate the possibility the Bank of England will act aggressively to support growth even as it’s keeping the quantitative-easing target unchanged for now. The pound will fall much further.”

The U.K. currency declined 0.4 percent to 86.12 pence per euro at 12:47 p.m. London time after depreciating to 86.37 pence, the weakest level since March 15. The U.K. currency dropped 0.8 percent to $1.5247.

Joblessness as measured by International Labour Organisation methods rose by 70,000 to 2.56 million in the three months through February, the Office for National Statistics said. The unemployment rate climbed to 7.9 percent from 7.8 percent. Regular pay growth slowed to 1 percent, the least since records began in 2001.

BOE Minutes

Six members of the Bank of England’s Monetary Policy Committee voted to keep quantitative easing at 375 billion pounds this month, according to the minutes of the April 3-4 meeting. King, David Miles and Paul Fisher wanted to increase it by 25 billion pounds.

“The short-run trade-off between output growth and inflation meant that the committee could return inflation to the target more quickly than currently expected only by taking policy actions that would provide less support to output,” the MPC said.

The pound tumbled 4.7 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar rose 2.4 percent and the euro also climbed 1.8 percent.

Gilts Advance

U.K. government bonds reversed an earlier decline as the jobs data fueled speculation the central bank will expand stimulus in coming months.

Gilts also gained along with U.S. Treasuries and German bunds as a slide in European stocks and commodity prices boosted demand for safer assets.

The 10-year gilt yield dropped three basis points, or 0.03 percentage point, to 1.70 percent. The 1.75 percent bond maturing in September 2022 gained 0.25, or 2.50 pounds per 1,000-pound face amount, to 100.415.

Pacific Investment Management Co., which manages the world’s biggest bond fund, is holding fewer longer-maturity gilts than recommended by the benchmark it uses to gauge performance, according to Mike Amey, a money manager for the company in London.

Amey said the 30-year gilt yield, at 3.04 percent today, provides scant protection when inflation is taken into account.

Consumer prices rose 2.8 percent in March from a year earlier, a government report showed yesterday. The rate has been above the central bank’s target of 2 percent every month since December 2009.

“If you have a sticky inflation rate, and maybe we will hit 3 percent, then flat real yields on a 30-year bond don’t look like a great deal to me,” Amey said. “I’m still underweight.”

Piagi states GBP Declines Against Euro Before U.K. Inflation Data

 

Piagi reports as the pound declined toward a three- week low against the euro before a report economists said will show the U.K.’s consumer-price inflation rate stayed above the Bank of England’s 2 percent target last month.

Sterling was little changed against the dollar. The annual inflation rate was 2.8 percent in March, unchanged from the previous month, the Office for National Statistics in London will say today, according to the median estimate of 36 analysts in a Bloomberg News survey. Ten-year government bonds snapped a three-day advance.

The pound slipped 0.2 percent to 85.44 pence per euro at 8:07 a.m. London time after depreciating to 85.60 pence on April 10, the weakest level since March 25. It traded at $1.5302.

The 10-year government bond yield climbed one basis point to 1.72 percent.

Inflation expectations were little changed after dropping for a third day yesterday, with the 10-year break-even rate, derived from the yield difference between gilts and index-linked securities, at 3.26 percentage points. The rate climbed to 3.39 percentage points on April 11, the most since September 2008.

The Bank of England will release minutes of its April 3-4 policy meeting tomorrow.

 

U.K. Inflation Stays at 2.8%, Extending Run Above BOE Goal

U.K. inflation was unchanged in March, extending its run above the Bank of England’s target and maintaining a squeeze on consumers.

Consumer prices rose 2.8 percent from a year earlier, the Office for National Statistics said in London today. That matched the median forecast of 36 economists in a Bloomberg News survey. In a separate release, the ONS said factory-gate prices rose 0.3 percent in March from February and were up 2 percent from a year earlier.

U.K. consumers are under pressure from rising prices and a fiscal tightening that’s deeper than that implemented by Margaret Thatcher during her premiership. While the government has broadened the BOE’s scope to add to stimulus even as inflation remains above its 2 percent goal, a majority of the Monetary Policy Committee voted to maintain the size of the bond-purchase plan this month.

“Inflation seems highly likely to rise modestly above 3 percent during the second quarter and stay there for much of 2013,” Howard Archer, economist at IHS Global Insight in London, said in a research note. “Several MPC members may want to see evidence that underlying price pressures are broadly contained before approving further stimulative action.”

The pound was little changed against the dollar after the data were published. It traded at $1.5279 as of 9:36 a.m. London time, from $1.5285 yesterday.

U.K. inflation has been above the BOE’s target every month since December 2009.

Recreation Costs

The biggest upward impact on the annual rate in March came from the category of recreation and culture, particularly digital cameras and DVDs. Car insurance premiums also had an upward impact. Downward pressure came from furniture, transportation and alcohol. From the previous month, consumer prices rose 0.3 percent in March, today’s report showed.

Core inflation, which excludes alcohol, tobacco, food and energy prices, accelerated to 2.4 percent in March from 2.3 percent in February. The Retail Prices Index, used in wage negotiations and as a basis for the inflation-linked bond market, was at 3.3 percent, up from 3.2 percent in February. Prices by that measure increased 0.4 percent on the month.

Challenging Backdrop

London-based Marks & Spencer Group Plc (MKS), the U.K.’s largest clothing retailer, posted the fastest quarterly sales growth in almost two years on April 11 as it cut prices on apparel. Still, it said conditions are “challenging.”

The Bank of England maintained its quantitative-easing program at 375 billion pounds ($574 billion) this month and held its key interest rate at a record low of 0.5 percent. Minutes of the decision to be published tomorrow will show whether Governor Mervyn King and two colleagues extended to a third month a push to expand QE by 25 billion pounds.

Today’s inflation report also showed that RPIX, which excludes mortgage interest payments, was at an annual 3.2 percent last month.

CPIH, which includes some housing costs, held at 2.6 percent. RPIJ, a variant which addresses difficulties with some Retail Prices Index formulae, was at 2.7 percent. Both are experimental indexes.

The producer-price data showed that core output prices rose 0.1 percent in March from February and increased 1.3 percent from a year earlier. Input prices fell 0.1 percent on the month and were up 0.4 percent from the same month a year ago. The biggest downward impact on the monthly input figure was a 2.6 percent drop in crude oil prices, the most since June, according to the ONS.

In another report, the ONS said annual U.K. house-price inflation cooled in February to 1.9 percent from 2.2 percent in January. In London, prices rose an annual 5.9 percent.

Piagi reports on the Market

 

Piagi reports as the Pound to Euro exchange rate slipped by around -0.8 cents last week as Japanese bond-buying boosted investors' appetite for risk.

The Euro rallied by a cent, pushing GBP/EUR below 1.1700, last Monday as the Bank of Japan embarked on the first round of its ambitious new stimulus programme. The BoJ propose to pump around $68 billion into the Japanese economy every month for the next two years to synthetically bolster inflation. The unprecedented QE scheme was seen to enhance risk sentiment because it made Japanese government bonds less attractive to investors. Higher yielding Eurozone sovereign debt benefitted from the exodus of Japanese money and this boosted the value of the single currency.

The Pound improved slightly on Tuesday morning in reaction to a strong Industrial Production figure of 1.0% monthly growth compared to predictions of just 0.4%. The report influenced the National Institute of Economic and Social Research (NIESR) to estimate UK growth of 0.1% during the first quarter. However, Sterling lost its footing during the afternoon as the Organisation for Economic Co-operation and Development (OECD) stated that "Slovenia is not in immediate need of economic rescue", which quelled swelling fears that Slovenia could become the next victim of an EU-imposed bailout package.

The Pound to Euro exchange rate struck a weekly low of 1.1682 on Wednesday morning but recovered by half a cent during the day as Annual Spanish Industrial Production shrank at an alarming pace of -6.5% during February. Italian production declined by -3.8%. The single currency was also hurt by news that the Cypriot Debt Sustainability Assessment predicts negative growth of -8.7% for the Mediterranean island this year.

GBP/EUR fluctuated close to the 1.1735 mark on Thursday as German CPI inflation was confirmed at 1.4% and the cost of Cyprus' bailout package was raised from €17 billion to €23 billion, with the large majority of the new funds coming from the restructuring of Cyprus' banking sector - in other words, Cypriot savers are paying for the package.

On Friday it was announced that Eurozone Industrial Production grew by 0.4% on a monthly basis during February, but declined by -3.1% compared to a year earlier. The data did little to influence ECB rate cut expectations. Later on in the day GBP/EUR dropped slightly to 1.1725 as the Eurogroup announced that it was "satisfied" with the measures taken to shore-up Cyprus' "unique" financial sector.

Later on this week the UK Consumer Price Index is expected to show that inflation remain above the Bank of England's 2.0% target at 2.8%, and the Eurozone CPI figure is predicted to remain below target at 1.7%. Overall the figures are likely to be considered Sterling-positive as the BoE hold-off on further asset purchases and the European Central Bank edges closer to a 25 basis points interest rate reduction. Also on tap is the UK Unemployment Rate, which is forecast to hold steady at 7.8%, and the UK Retail Sales print, which is predicted to show mild growth of 0.9%.

The direction of GBP/EUR is likely to be influenced by the BoE's Minutes report on Wednesday, which will give a good indication of the Central Bank's stance on monetary easing as we enter the second quarter. Any dovish remarks will come under intense scrutiny, and the margin of victory for those who voted against further QE could prove telling. If more than 3 members voted for additional asset purchases then we could see Sterling begin to slide towards 1.1600, but if less than 3 opted for further stimulus - indicating that at least one MPC member was feeling more optimistic this month regarding the UK economy - then the Pound could rally towards technical resistance levels at 1.8390.